Since about 2003, the wages Americans receive have stayed essentially flat, even as productivity has climbed. If that hasn't been your experience, we'll assume you're a woman, a white collar worker, or were already in the upper income bracket.
The findings come from the Economic Policy Institute, which recently released its assessment of American wage growth. Or, rather, non-growth. In summary:
The wage-setting mechanism has been broken for a generation but has particularly faltered in the last 10 years, once the robust wage growth of the late 1990s subsided. Corporate profits, on the other hand, are at historic highs. Income growth has been captured by those in the top 1 percent, driven by high profitability and by the tremendous wage growth among executives and in the finance sector.
But why listen to words when a graph will do? Here's the EPI's chart of wage growth versus productivity this century.
Note that its shown as percent change since 2000. So wages grew until about 2003, and then the percent change since 2000 stayed flat.
As the paragraph above suggests, this effect wasn't universal. Our colleagues at The Atlantic noted one differentiator: education. A much stronger indicator of how much you were likely to see your wages increase is how high your wages were already.
The graph below shows four time periods — from 2000 to 2007 (the pre-recession period), 2007 to 2012 (post-recession), 2000 to 2012 (this century), and 1979 to 2012. Each bar represents the percent change of hourly wages (in 2012 dollars) over that time period. So that tall green bar at the far right means that for those in the 95th percentile of wages (the highest-income five percent), wages grew 39 percent between 1979 and 2012.
The long-term trend is clear from the green bars: the more you make, the more your wages grew over the last 30 years. But the red bars, which show changes since 2000, are more revelatory. Only those who were already in the 70th percentile of wage-earners saw wage growth since the year 2000. For those in the lower third of earners, any wage gains before the recession were wiped out in the following years.
Not surprisingly, that data correlates to the type of job you hold. The graph below shows wage (not total compensation) changes among various careers. They're clustered: everyone, then three white-collar categories, then three blue-collar categories, then service workers.
Among white-collar professions, sales people took the biggest hit — mostly as a result of the economic drop after the recession. Blue-collar workers fared less well; service sector workers saw steady decline. The service sector, it's worth noting, has consistently been among the fastest-expanding sectors of job growth.
A quick look at demographics suggests another way that the wage stagnation has not been uniform. Women were far more likely to see wage increases — in part because they had a wage gap to make up. Since 1979, men's median weekly earnings have stayed essentially flat, while women's have grown by almost a third.
The EPI summarizes its report in italics, on its third page. "The vast majority of wage earners," it writes, "have already experienced a lost decade, one where real wages were either flat or in decline." The wage-growth exceptions noted above — the wealthy, certain job-holders — are just that. The norm is a flat line.
This article is from the archive of our partner The Wire.
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